The financial statements of PepsiCo, Inc. are presented in Appendix A. The notes accompanying the statements contain the following selected accounts, stated in millions of dollars.
Accounts Payable Income Taxes Payable
Accounts Receivable Interest Expense
Property, Plant, and Equipment Inventory
Instructions
(a) Answer the following questions.
(1) What is the increase and decrease side for each account?
(2) What is the normal balance for each account?
(b) Identify the probable other account in the transaction and the effect on that account when:
(1) Accounts Receivable is decreased.
(2) Accounts Payable is decreased.
(3) Inventory is increased.
(c) Identify the other account(s) that ordinarily would be involved when:
(1) Interest Expense is increased.
(2) Property, Plant, and Equipment is increased.